FSC refers China Development fileto prosecutors

The Financial Supervisory Commission (FSC) said yesterday it had referred a controversial case involving China Development Financial Holding Co (開發金控) to the Taipei Prosecutors' Office yesterday afternoon.

"We handed over our investigation's results to the Taipei Prosecutors' Office yesterday afternoon on whether China Development was involved in insider trading and breach of trust in its takeover bid of Taiwan International Securities Corp (金鼎證券)," commission spokesman Lin Chung-cheng (林忠正) said yesterday.

The regulator suspected that some people may have been derelict in their duties during the transactions, Lin said.

"We would not hand the case over to the prosecutors if we did not have suspicions about the company's involvement in illegal activities," another commission official said, speaking on condition of anonymity.

China Development Financial, the nation's 13th-biggest financial group by assets, was suspected of benefiting certain major shareholders who disguised themselves as foreign investors and reaped profits using insider information during the firm's hostile takeover attempt of Taiwan International.

Meanwhile, China Development Financial said in a statement that it had decided to file a suit against the Chinese-language Business Today (今周刊) magazine over a cover story which the company said was incorrect and libelous.

Business Today alleged that Angelo Koo (辜仲瑩), president of China Development Financial, was involved in embezzlement by bypassing the board of directors to use company funds to invest in financially troubled China Life Insurance Co (中國人壽), owned by the Koo family.